You Observe a Closed Economy That Has a Government Deficit

question 36

Multiple Choice

You observe a closed economy that has a government deficit and positive investment.Which of the following is correct?

• A)Private and public saving are both positive.
• B)Private saving is positive;public saving is negative.
• C)Private saving is negative;public saving is positive.
• D)Both private saving and public saving are negative.

---

Definitions:

Time Value of Money

The concept that money available now is worth more than the same amount in the future due to its potential earning capacity.

Equivalent Payment

A term often used in finance to indicate a payment that has the same value or purchasing power as another, possibly under different conditions or payment schedules.

Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, used to assess price changes associated with the cost of living.

Compound Annual

A rate that calculates and expresses the cumulative effect of a series of gains or losses on an original amount of capital over a period of time, usually on an annual basis.